Well…

It’s more complicated than that. You have to use the HMRC website and use the form on that page to send them an e-mail.

The form that you have to complete is, err …, comprehensive and will take a few minutes to complete. In addition, it can only be used for telling HMRC about changes to personal data. If you are a business and want to tell HMRC about changes for the business you need to take alternative action.

If you are registered to use Self-Assessment Online you can log on to HMRC’s website and update your details there.

Changes to your business details

Unfortunately you have to use an alternative method to the e-mail system described above. It is no more complicated but means that if you are sole trader you have to remember that you may have to use the two different systems. This being a website for help with VAT issues I’ll confine my comments to that, but if you are looking for guidance on how to tell HMRC about changes relating to other taxes visit this page on HMRC’s website.

For VAT if you are registered for VAT Online services you can go to the log in page on HMRC’s website and update your information there.

Related posts:

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I was ‘talking’ via a social networking website with a friend recently and the conversation turned to business. May friend asked, “Might I trouble you with a swift VAT query?” and continued “I’m about to buy a car through the company, to use up some excess cash and reduce my Corporation Tax bill, and I was vaguely wondering if there were any wrinkles that would allow me to claim some or all of the VAT back? I can designate it 100% business use and keep full mileage logs if that will help. Any ideas?”

Here’s my response:

“The only way to get any VAT back is, unless you operate a car dealership or a taxi company, to designate it wholly business and have it insured wholly for business – no social domestic or pleasure use. It would also help if it was kept at business premises that are not also your home.

“Really the best way to save VAT on a company car is to lease it – avoiding any suggestion that you might be buying it at the end of the lease. This way you’ll get back 50% of the VAT on the lease payments.

“If you have to buy it outright to eat up all that profit you have, the best you can do is to make sure that all the expenses for it go through the company and you recover the VAT on them.

“Fuel is another issue and it is worth looking at whether the application of a Fuel Scale charge might be beneficial. You claim back the VAT on all your motoring, and pay a fixed amount to HMRC on each VAT return to ‘repay’ the VAT on private motoring. If you do a lot of private motoring, and not much business motoring this could be beneficial.

“These ideas fall flat on their face if you use the Flat Rate Scheme.

“If you have any more questions, just ask!”

And he did!

“A very comprehensive response, thank you.

“OK, one last question, if I may – if I were to claim the VAT back, and a subsequent inspection reversed that, would those nice men with the rubber gloves just ask for the VAT money, or are there additional penalties levied on top?”

This is an important point to which I replied:

“If you claimed back the VAT by mistake and HMRC discover that over claim you will have to pay interest on the amount repaid and might face a penalty of up to 100% of the VAT involved.

My advice is to get it right – even if it hurts a bit – that will be less painful than a penalty later.”

He replied: “OK, sound advice, thanks – given the rather obvious chance of it going against me, I wasn’t planning on claiming anything back if there was even a small penalty. 100% of the VAT involved isn’t small

Perhaps I’ll just have to buy a company bike as well, then.…”

Now there’s a topic for another post.

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1. Blocked input tax – part one
2. New penalty régime
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This is a very important issue, and one of which many might be unaware. Please pass the information on and do so in a way that avoids making this spam. You can find the original press release, of which the text below is a copy, on the COI website.

“HM Revenue & Customs (HMRC) is warning taxpayers to be vigilant following reports that thieves are making phone calls pretending to be the taxman.

The fraudsters inform taxpayers they are due a tax rebate, and ask for their bank card details over the phone. They then attempt to take money from the account using the details provided. Victims risk having their bank accounts emptied and their personal details sold on to other organised criminal gangs.

The warning comes amid a recent surge in the number of tax scam “phishing” emails reported to HMRC. In the last three months, HMRC has shut down over 180 websites that were responsible for sending out the fake tax rebate emails.

Chris Hopson, Director of Customer Contact at HMRC said:

“We only ever contact customers who are due a tax refund in writing by post. We never use telephone calls, emails or external companies in these circumstances. We strongly urge anyone receiving such a phone call not to give any information to the caller, but report it to the police straightaway.

“If customers receive an email claiming to be from HMRC, we recommend they send it to us for investigation before deleting it permanently.”

HMRC thoroughly investigates phishing attacks and works with other law enforcement agencies in the UK and overseas. In the last 18 months, scam networks have been shut down in a number of countries, including Austria, Mexico, the UK, South Korea, the USA, Thailand and Japan.

HMRC strongly advises customers to:

• Check the advice published at www.hmrc.gov.uk/security/index.htm to see if the email you have received is listed
• Forward suspicious emails to HMRC at phishing@hmrc.gsi.gov.uk and then delete it from your computer/mail account
• Do not click on websites, links contained in suspicious emails or open attachments
• Follow advice from www.getsafeonline.co.uk

If you have reason to believe that you have been the victim of an email scam, report the matter to your bank/card issuer as soon as possible. If in doubt please check with HMRC athttp://www.hmrc.gov.uk/security/fraud-attempts.htm”

What’s your views on this behaviour? Leave a comment…

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1. HMRC update information on known fraud attempts against taxpayers
2. Tell HMRC your new name and address by e-mail
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You may know that VAT registered businesses with a turnover of more than £100,000 per year had to start doing their VAT Returns online from April 2010. HMRC has just announced that all other businesses that do paper VAT Returns will have to move to online Returns in 2012.

There are many benefits to doing your VAT Return online:

If you still do your return on paper consider moving to online returns. It is simple and easy to do.

You will need to register for the online VAT service on HMRC’s website. You will be sent a PIN (by post) so you can activate the service. After this you need to set up the payment system – allow a couple of weeks at least to get a direct debit set up. This means you should do this in good time before your next VAT Return is due.

You can always ask your bookkeeper or accountant to do this for you.

I’d love to hear your views or questions on this in the comments section below.

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An accountant recently asked me to help with a problem that one of his clients was facing.

The client was a company which owned a property. When it bought the property it had to pay VAT. To be able to recover this VAT the company opted to tax the property, i.e. it opted to charge VAT on any supply it made of the property. Without opting to tax the property the rental income would have been exempt from VAT and the VAT on the purchase price would have been irrecoverable.

Up to a couple of years ago the property company had received regular payments of rent and accounted for VAT. It then stopped receiving payments and put in nil VAT returns. This eventually attracted the attention of HMRC which wrote to the company asking it to give good reason to remain VAT registered, or its VAT registration would be cancelled. The letter from HMRC also invited the company to apply for its registration to be cancelled and gave instructions on how to find out how to do this.

The company after seeking advice decided to apply for its registration to be cancelled. Unfortunately it had overlooked the impact of doing this which would mean that because it had a property on which it had recovered VAT when it bought it, it would have to account for VAT on it. At the very least this would be the VAT it recovered when it bought the property, but based on the rules for determining the value of assets on hand at the time a registration is cancelled this would probably mean taking a current market value which would be substantially higher than the price paid. The result being that the VAT that would have to be paid to HMRC would be rather more than the company could reasonably expect to find with ease.

The accountant who was aware of the potential problems for his client returned from holiday to find that his client’s VAT registration was being cancelled with the potential for a large VAT bill for the current value of the property.

HMRC have been made aware of the position and the company has decided to start collecting rent again. This means that the company will again be making taxable supplies and should be able to keep its VAT registration number. The response from HMRC is awaited.

Now this is a more complicated case than one might expect to find in the average case where a business cancels its VAT registration. It serves, however, to highlight the need to make sure that nothing is ignored when making the decision to apply for cancellation of a VAT registration.

What do you need to consider?

The legal bits

Have you ceased to trade? If so you should tell HMRC within 30 days.

If your turnover has fallen below the relevant limit – see the registration limits page for details – you may apply to cancel your registration.

The consequences

If you cancel your registration, you will have to pay HMRC VAT on the goods you have on hand on the last day the business’s VAT registration where the VAT on those goods would be more than £1,000. This means that the value of goods on hand would have to be more than £5,715 where the rate of VAT is 17.5% or £5,000 where the rate of VAT is 20%.

Some items are excluded from the charge to VAT. These are mostly items on which no VAT has been recovered.

How do you work out the value of the goods

The value is the amount you would have to pay to purchase identical or similar goods, including taking into account age and condition, on the date the registration is cancelled.

How do you account for this VAT?

You put the VAT that is due on the Final VAT Return that you receive from HMRC.

If you are considering cancelling your VAT registration, or have been told by HMRC that they will compulsorily cancel it, you should seek help from a VAT specialist.

If you have any questions on this issue, please leave a comment and I’ll reply as soon as I can.

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1. VAT registration woes..
2. VAT Registration limits – updated for 2009
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The registration limits from 1 April 2010 are:

Past VAT registration and deregistration limits:

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HMRC has published Revenue & Customs Brief 25/10 announcing the change of policy. Following representations from charities that pay per click advertising should be zero-rated HMRC has reviewed its approach and concluded that it should change the VAT treatment of pay per click advertising supplied to charities.

The Revenue & Customs Brief invites businesses that have supplied pay per click advertising the charities to make claims for overpaid VAT. HMRC say that claims will only be accepted for supplies made in the last four years and subject to the unjust enrichment rules. This means that claims can be made for supplies made in the last four years, i.e. back to 2006 at the time of writing, and the VAT refunded to the charities from which it was collected.

Action to take

Suppliers of pay per click advertising

You should seek confirmation from your charity clients that they qualify for the zero-rating of advertising services using the form of declaration in the VAT Notice on “Charity advertising and goods collected in connection with donations” if you consider it necessary. At the very least you need to show that the service was provided to a charity.

You should also prepare a detailed claim for submission to HMRC. The claim should include as much supporting evidence as possible.

Charities

Contact your pay per click advertising suppliers and request a refund. It will no doubt help your supplier if you provide a list of the invoices involved together with the amounts, and suitable confirmation that you are a charity. You may wish to use the form of declaration shown in Section 10 of VAT Notice 701/58 (January 2010).

If you need further help with this contact your usual VAT adviser.

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1. Sponsorship – can it be zero-rated as charity advertising?
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HMRC have published Revenue & Customs Brief 21/10 which outlines how hotel booking agents can operate in a way that allows their business clients to recover the VAT on hotel bills. This would clearly reduce the VAT bill of any business using hotel booking agents’ services. So would HMRC have transgressed the rules they had laid out in draft on deliberate wrongdoing by tax agents.

Under the draft legislation a tax agent was defined as anyone who suggested a way in which another person could reduce their tax liability. There was no need for there to be any payment for the advice.

This would suggest that if that legislation was in place HMRC would, by issuing this Revenue & Customs Brief, have broken its own rules and would therefore have to fine itself for deliberate wrongdoing!

In addition, given the amounts of tax involved, it would appear that HMRC would also have to add itself to the published list of deliberate wrongdoers – they’d be named and shamed!

What are your views on this? Add a comment – I’d love to read what you think about this.

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Here’s some important information for businesses with a VAT return period ending on 28 February 2010:

Do your VAT return before Easter!

Why?

Because HMRC will be upgrading there online system over Easter. And you won’t be able to access the system from Saturday 3 April 2010 until 6 April 2010.

Don’t believe me? Have a look at HMRC’s website where it says:

Normally you would have seven days in which to submit your return. By carrying out this work over Easter HMRC are reducing the time available for you to do your VAT return. My recommendation is to get your VAT return submitted before Saturday to avoid problems that might arise should the work overrun or there be too many trying to do their VAT return on Tuesday 6 April 2010.

Penalties

If you are late submitting your VAT return you will probably be sent a surcharge liability notice. If this is the first time you receive one it means that you are liable to a penalty if you submit a VAT return late in the following twelve months, i.e. for a VAT period ending 28 February 2010 you have to submit all VAT returns, and pay the VAT, on time for all periods up to 28 February 2011.

If you receive a surcharge liability notice and it is not your first, you may be charged a penalty. The penalty will be calculated as a percentage of the tax due, on a rising scale, from 2% to 15%, depending on how many times you have been late with your VAT return.

Frightening, isn’t it?

I’d love to have your comments on this. What do you think? Should HMRC have done this work later in the month to avoid putting unnecessary pressure on businesses?

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For periods starting after 30 April 2010

The fuel scale charge applies to all business cars which are used for
private motoring. The following table sets out the fuel scale charges
for VAT periods commencing after 30 April 2010.

The amount listed under Scale Charge is the VAT inclusive amount. You need to subtract the VAT due to get the figure to include in Box 6 on your VAT Return.

For vehicles for which unable to find a CO2 emissions figure, you should identify the CO2 band based on engine size, as follows:

Whilst every effort has been made to ensure that the figures in the following tables are accurate you should still check the official tables published by HMRC.

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